What is capacity?
In general, a person has capacity (known as ‘decision making capacity’) if they understand the nature and effect of a particular decision.
More specifically, having decision making capacity means that you are able to:
- understand the information relevant to a particular decision and the effect of the decision;
- retain that information to the extent necessary to make the decision;
- use or weigh the information as part of the process of making the decision; and
- communicate the decision in some way.
For a person to have capacity to make a power of attorney, the person must understand the nature and effect of making that particular power of attorney. For example, in relation to an enduring power of attorney, the person must understand (amongst other things) that the power continues even if they no longer have decision making capacity for the matters covered by the power, and that during that time they will not be able to effectively oversee their attorney’s use of the power.
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